McCrae was born in McCrae House in Guelph, Ontario to Lieutenant-Colonel David McCrae and Janet Simpson Eckford; he was the grandson of Scottish immigrants. He attended the Guelph Collegiate Vocational Institute and became a member of the Guelph militia regiment. The background of his family is military.

McCrae worked on his Bachelor of Arts at the University of Toronto in 1892–93. While there, he was a member of the Toronto militia, The Queen's Own Rifles of Canada. He was eventually promoted to Captain and commanded the company. He took a year off his studies at the university due to recurring problems with asthma.

Among his papers in the John McCrae House in Guelph is a letter he wrote on 18 July, 1893 to Laura Kains while he trained as an artilleryman at the Royal Military College of Canada in Kingston, Ontario. "...I have a manservant .. Quite a nobby place it is, in fact .. My windows look right out across the bay, and are just near the water’s edge; there is a good deal of shipping at present in the port; and the river looks very pretty."

He was a resident master in English and Mathematics in 1894 at the Ontario Agricultural College in Guelph.

He returned to the University of Toronto and completed his B.A. McCrae returned again to study medicine on a scholarship. While attending the university he joined the Zeta Psi Fraternity (Theta Xi chapter; class of 1894) and published his first poems.

While in medical school, he tutored other students to help pay his tuition. Two of his students were among the first women doctors in Ontario.

He completed a medical residency at the Robert Garrett Hospital, a children's convalescent home in Baltimore, Maryland.

In 1902, he was appointed resident pathologist at Montreal General Hospital and later became assistant pathologist to the Royal Victoria Hospital in Montreal. In 1904, he was appointed an associate in medicine at the Royal Victoria Hospital. Later that year, he went to England where he studied for several months and became a member of the Royal College of Physicians.In 1905, he set up his own practice although he continued to work and lecture at several hospitals. The same year, he was appointed pathologist to the Montreal Foundling and Baby Hospital. In 1908, he was appointed physician to the Royal Alexandra Hospital for Infectious Diseases. In 1910, he accompanied Lord Grey, the Governor General of Canada, on a canoe trip to Hudson Bay to serve as expedition physician.

McCrae served in the artillery during the Second Boer War, and upon his return was appointed professor of pathology at the University of Vermont, where he taught until 1911; he also taught at McGill University in Montreal, Quebec.

When the United Kingdom declared war on Germany at the start of World War I, Canada, as a Dominion within the British Empire, declared war as well. McCrae was appointed as a field surgeon in the Canadian artillery and was in charge of a field hospital during the Second Battle of Ypres in 1915. McCrae's friend and former student, Lt. Alexis Helmer, was killed in the battle, and his burial inspired the poem, "In Flanders Fields", which was written on May 3, 1915 and first published in the magazine Punch.

From June 1, 1915 McCrae was ordered away from the artillery to set up No. 3 Canadian General Hospital at Dannes-Camiers near Boulogne-sur-Mer, northern France. C.L.C. Allinson reported that McCrae "most unmilitarily told [me] what he thought of being transferred to the medicals and being pulled away from his beloved guns. His last words to me were: 'Allinson, all the goddamn doctors in the world will not win this bloody war: what we need is more and more fighting men.'""In Flanders Fields" appeared anonymously in Punch on December 8, 1915, but in the index to that year McCrae was named as the author. The verses swiftly became one of the most popular poems of the war, used in countless fund-raising campaigns and frequently translated (a Latin version begins In agro belgico...). "In Flanders Fields" was also extensively printed in the United States, which was contemplating joining the war, alongside a 'reply' by R. W. Lillard, ("...Fear not that you have died for naught, / The torch ye threw to us we caught...").

For eight months the hospital operated in Durbar tents (donated by the Begum of Bhopal and shipped from India), but after suffering storms, floods and frosts it was moved in February 1916 into the old Jesuit College in Boulogne-sur-Mer.

McCrae, now "a household name, albeit a frequently misspelt one", regarded his sudden fame with some amusement, wishing that "they would get to printing 'In F.F.' correctly: it never is nowadays"; but (writes his biographer) "he was satisfied if the poem enabled men to see where their duty lay."

On January 28, 1918, while still commanding No 3 Canadian General Hospital (McGill) at Boulogne, McCrae died of pneumonia with "extensive pneumococcus meningitis". He was buried the following day in the Commonwealth War Graves Commission section of Wimereux Cemetery, just a couple of kilometres up the coast from Boulogne, with full military honours. His flag-draped coffin was borne on a gun carriage and the mourners — who included Sir Arthur Currie and many of McCrae's friends and staff — were preceded by McCrae's charger, "Bonfire", with McCrae's boots reversed in the stirrups. McCrae's gravestone is placed flat, as are all the others in the section, because of the unstable sandy soil.

A collection of his poetry, In Flanders Fields and Other Poems (1918), was published after his death.

Though various legends have developed as to the inspiration for the poem, the most commonly held belief is that McCrae wrote "In Flanders Fields" on 3 May 1915, the day after presiding over the funeral and burial of his friend Lieutenant Alex Helmer, who had been killed during the Second Battle of Ypres. The poem was written as he sat upon the back of a medical field ambulance near an advance dressing post at Essex Farm, just north of Ypres. The poppy, which was a central feature of the poem, grew in great numbers in the spoiled earth of the battlefields and cemeteries of Flanders. McCrae later discarded the poem, but it was saved by a fellow officer and sent in to Punch magazine, which published it later that year.

In 1855 Lord Macaulay, writing about the site of the Battle of Landen (in modern Belgium, not far from Ypres) in 1693, wrote "The next summer the soil, fertilised by twenty thousand corpses, broke forth into millions of poppies. The traveller who, on the road from Saint Tron to Tirlemont, saw that vast sheet of rich scarlet spreading from Landen to Neerwinden, could hardly help fancying that the figurative prediction of the Hebrew prophet was literally accomplished, that the earth was disclosing her blood, and refusing to cover the slain."

The Canadian government has placed a memorial to John McCrae that features "In Flanders Fields" at the site of the dressing station which sits beside the Commonwealth War Graves Commission's Essex Farm Cemetery.

A common mistake is often made while reciting. The original poem was written "In Flanders fields the poppies grow", but most people know this line as "In Flanders fields the poppies blow". On the Canadian ten dollar bill, the first few lines of the poem are written in small print. It was first printed as "poppies blow", but a few years after discovering the mistake, it was changed to "poppies grow".

] called the "In Flanders Fields Museum", named after the poem.

There are also a photograph and short biographical memorial to McCrae in the St George Memorial Church in Ypres.